Doctors Eliminate the Middleman: Insurance

Doctors Eliminate the Middleman: Insurance

In Seattle, Washington, a group of 12 physicians and nurse practitioners see patients at a clinic that doesn’t accept insurance. Instead, patients pay roughly $65 a month, every month. In return they get unlimited office visits (including evening and weekend office hours), e-mail and phone access to practitioners, and – my favorite part – appointments that last up to an hour.

There are some additional charges, such as for lab work and other outside services, but these are billed at or near cost, and many medications are available at a discount. Even if you add in the cost of catastrophic medical coverage – say, $225 a month – this is still a reasonable price to pay for health care, especially compared to the premiums charged these days by major health insurance companies.

The real beauty of the plan, however, is not only that it’s attractive to patients. It can be a way for struggling primary care physicians to maintain a financially viable practice. The average patient pays $700 to $800 a year for membership. According to a report from Kaiser Health News, this is three times more than a doctor makes for each patient in an insurance-based practice. Not to mention the extra time and the absence of aggravation that comes when doctors eliminate insurance companies.

“So we can have a third the number of patients and get the same revenue per clinician, but with much less overhead.” … The approach, he says, allows Qliance to funnel more money into the care itself — through longer office hours, for example, or better diagnostic equipment.

A patient at Qliance comments: “The doctors will sit there with you as long as you need them to. … They don’t rush in and out.”

Lower costs and no complaints

Direct-pay primary care was encouraged in Washington by a new state law in 2007. The law permits direct patient practices – also called retainer health care – to operate without some of the legal and financial requirements typically imposed on entities such as insurance companies and HMOs. The goal of the legislation was to provide more affordable care for patients, improve access to primary care, and reduce the use of emergency rooms for primary care purposes.

In addition to Qliance, which has three clinics, there are 15 other direct-pay practices in Washington. Some of these are “concierge” practices that charge as much as $850 a month and attract only wealthy patients. But according to a report (PDF) on direct health care practices from the Washington state insurance commissioner, as of the end of last year, “Most of the growth is at practices charging fees averaging $85 to $135 a month. Four of the new practices offer monthly fees of less than $65.” The report also mentions: “The insurance commissioner’s consumer hotline did not receive any complaints regarding direct patient practices.”

Other states have set up similar subscription-based practices. For example, at Access Healthcare in Apex, N.C., patients pay $39 a month plus $20 per visit for unlimited primary-care services. This arrangement has been in operation for 10 years now, and the founder, Brian Forrest, expects to open the first franchise this summer.

Forrest, a physician, says that half of his clients have insurance, with their typical copayments for primary-care visits averaging $35 to $50. “For lots of insured patients, it’s actually cheaper for them to see us.”

Coming in 2014, if we still have health care reform

This sounds like a win-win situation for patients and their primary care physicians. It requires the cooperation of state laws with regard to legal and financial requirements. That will become much more widespread once the new health care law goes into effect in 2014. Kaiser Health News reports:

Under a provision in the new law, insurers selling plans on the state-based insurance exchanges that will open in 2014 will be allowed to “provide coverage through a qualified direct primary care medical home plan that meets criteria established by the Secretary.”

As envisioned by Qliance, direct-pay practices like theirs will link to custom “wraparound” health insurance policies that would pick up where Qliance leaves off, providing specialist care, hospitalization and the like.

“What we’re inventing here is a new relationship between primary care and insurance,” says Garrison Bliss, chief medical officer for Qliance Medical Management. Patients would essentially have two monthly health-care fees: one that they’d pay to a doctor’s office for their primary care and another they’d pay to an insurer for all their other care. Providing better primary care should reduce insurance claims for emergency care and hospitalization down the road, Qliance’s Wu says.

One objection that’s been raised to this approach is that it doesn’t help patients who can’t afford the monthly cost of subscribing to a primary care practice. This is true. The US needs a single-payer system that’s not based on pay-for-performance and that provides universal coverage. I understand the motivation for the objection: Direct-pay primary care could be so successful that it would reduce the urgency for universal coverage. Until that day comes, however, this certainly seems like a solution, not only for patients, but for primary care physicians who are struggling with inadequate compensation and the frustrations of the current insurance-based system.

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